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Moneyval interviewed people at Cypriot government institutions to see how they implement international standards.

EUobserver understands that Deloitte audited a sample of Cypriot banks, but not Cyprus-based branches of foreign banks, to see how private firms do it.

One EU source familiar with the content told this website: "It's not as bad as many people thought it would be."

Another EU source said: "They discovered much less [wrongdoing] than people expected."

But in fact, expectations were quite low.

Moneyval had already given Cyprus a clean bill of health on money laundering in four past reports.

And Deloitte's audit could only be superficial - it takes up to a year to do proper due diligence on just one bank, but the US firm had less than a month to check multiple lenders.

Its exclusion of foreign banks also risks missing a whopper.

A UK-based investment firm, Hermitage Capital, has given Cyprus hard evidence that five Cyprus-based banks handled mafia money linked to the death of the late, celebrated Russian whistleblower Sergei Magnitsky.

Four out of the five were branches of foreign lenders, from Latvia, Lebanon and Ukraine.

"I have a feeling the conclusions were written before they [Moneyval] made the survey … It's funny, but in a sad way," one EU official said.

Moneyval gave the text to the Cypriot finance ministry and central bank on 24 April.

Cyprus is to circulate an abridged version to eurozone finance ministers over the weekend.

The ministers will then discuss it in Brussels on Monday (13 May).

If they identify problems, they will demand reforms to be enshrined in a memorandum of understanding on the Cypriot bailout.

The memo will be drafted in the next couple of weeks and Cyprus will have to comply to get its €10 billion rescue loan.

There is confusion on whether EU taxpayers will ever find out what it says, however.

One EU diplomat told this website: "It must be published, at the latest when the final decision on the first tranche [of the bailout payment] is made. There are too many people interested in seeing it."

Another EU diplomat said "part" of it will be made public, but it will be redacted to protect banks' commercial secrets and savers' private data.

But the European Commission told EUobserver it is an internal document designed never to come out.

Meanwhile, the level of security around the text is likely to increase curiosity.

Nicosia has it on paper copies only to stop electronic leaks. The abridged version is also to be handed out in paper form to eurozone finance ministers and their close advisors only.

Timing was important because some EU countries' parliaments, including the Bundestag, voted on ratifying the Cyprus bailout in mid-April.

But in the end, Moneyval was given a free hand on when to write it up.

One reason for the delay was a mix-up inside the EU institutions.

The Eurogroup - the club of eurozone finance ministers - called for the audit in a public statement in mid-March.

EU officials then realised the Eurogroup as such has no budget to pay for Deloitte's work. One option was for the EU Council to foot the bill. But EU officials finally persuaded the Cypriot central bank to cough up.

Back in the Bundestag, German centre-right and centre-left MPs on 13 April blessed the Cypriot bailout without seeing the Moneyval paper.

The centre-left opposition party, the SPD, did it despite earlier making a fuss on German taxpayers' money going to Russian mobsters.

An SPD contact told this website the party is still "very serious" about the issue.

He said that German Chancellor Angela Merkel agreed to four SPD conditions in return for its support in the April vote, one of which was Cypriot action on money laundering.

He noted that neither the conditions, nor Merkel's agreement, were ever written down in a letter or other semi-binding text, however.

Italy would be committing economic "suicide" if it fell in line with EU rules, its deputy leader has said, in a sign that Rome has little intention of bowing to pressure ahead of Tuesday's budget deadline.

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